NEW DELHI: Private equity investments in retail real estate have surged to Rs 3,350 crore in the first half of 2016, the highest since 2008, on improved leasing activity, relaxed government policies and positive economic outlook, according to property consultancy Cushman & Wakefield.

PEs invested around Rs 250 crore in the same period last year.

The share of retail real estate in total PE investments in India has also increased to 18% in H1 2016, against 2% in the same period last year.

“Positive economic outlook and large market potential continue to attract retailers to India. In addition to consumer spend, which increased by 10% during last 12 months, e-commerce is also contributing majorly to the increased retail spending by Indian consumers," said Anshul Jain, managing director, India, Cushman & Wakefield.

New malls also registered the highest half yearly supply in five years at 4.8 million sq ft in H1 2016, against just 0.2 msf in H1 2015.

Delhi-NCR accounted for the highest supply during H1 2016, grabbing 64% of the share in new supply during the first half of 2016, mainly owing to completion of Mall of India in Noida, which is one of the largest malls in India.

Pune grabbed the second spot in new mall supply, with three malls becoming operational, spanning a total of 0.8 msf during H1 2016, while Mumbai witnessed 0.4 msf of mall space coming into supply.

Delhi NCR and Mumbai remain the largest retail markets, accounting for 35% and 20%, respectively, of the mall stock across the top 8 cities in India, followed by Bengaluru, which accounts for about 12% of the total stock.

“We are expecting to witness some e-commerce companies take up physical spaces in malls to reach out to a wider Indian audience. Retailers are also increasingly consolidating their operations by mergers and acquisitions to cut down competition, gain market share and capitalize on synergies to get better results for their bottom-lines. All of these trends are resulting in increased investments by financial institutions and PE funds in this asset class," Jain said.

Around 13 msf of new mall supply is scheduled for completion until the end of 2018 across the top 8 cities, according to Cushman & Wakefield.